Milo is a strategy consultant in the US and a Visiting Professor at IE business school in Spain. Philippe is a Professor at EMLYON Business School and a Research Fellow at Ecole Polytechnique in France. We are the authors of "Constructing Cassandra, Reframing Intelligence Failure at the CIA, 1947-2001" (Stanford U Press). We blog together at silberzahnjones.com.

What a Caveman Can Teach You About Strategy

Anyone who doubted how much effort Osama bin Laden put into shaping his public image might be surprised to learn that he was an enthusiastic user of ‘Just for Men’ to darken his graying beard. But how does the usual picture of bin Laden fit with this idea of image control? Doesn’t a man who seemed to spend his time living in caves look distinctly unthreatening, some sort of primitive ‘kook’? As the late US diplomat Richard Holbrooke asked, “How can a man in a cave out-communicate the world’s leading communications society?” Because out-communicate us he certainly did.

The answer to Holbrooke’s question lies in how well bin Laden understood both his enemies and his admirers. Traditional Muslims, for example, do not associate caves with the undesirable or the primitive. Quite the contrary: in the Islamic world, caves have often been considered holy places, and associated with miracles. According to Islamic teaching, for example, Mohammad received his revelation in a cave.

The symbolism involved therefore worked in opposite directions depending on the identity of the observer. The same images that contributed to Westerners’ condescension of bin Laden contributed to some Muslims veneration of him. In our forthcoming book, we demonstrate how this phenomenon helped distort the CIA’s perception of bin Laden prior to 9/11, and thereby contributed to the strategic surprise of the attacks.

In part Bin Laden’s future victims underestimated him because their identities filtered their perceptions. This is what we mean when we say that strategic surprises are largely socially constructed, and this way of thinking applies to the business world, too. Inevitably, a firm’s identity and culture act as filters and frames, and enable the organization – through its members – to make sense of its environment. But these filters can also distort a company’s analysis and blind it to unexpected events. This is not because the events in question are inherently unpredictable or unimaginable (indeed, they are often predicted and imagined by some), but because they do not fit the frame of corporate identity and culture. In short, what you are surprised by depends in large part on who you are.

I am a caveman and I'll teach you a strategy lesson you won't forget

The corollary of this is that whether a new business opportunity is attractive or not also depends mainly on identity. In a major study of management failures, Harvard scholar Clayton Christensen found that incumbent leaders often did not find the opportunities created by disruptive technologies attractive. Why? Simply because they didn’t fit with their existing business model, and thus their identity as a firm.

Take Kodak, for instance. This was a company that knew everything about digital disruption in the photo industry, because it had invented most of the technology behind it. But what Kodak couldn’t do was to bet big on digital, because it would run against its traditional business model. Any investment in digital meant less investment in film, which had always defined who Kodak was. And the results of that stubborn refusal to shift are all too well known.

Identity works in the other direction, too. Remember that famous picture of Sam Walton dancing around in a grass hula skirt and floral shirt in 1984? He looked stupid, and he knew it. He also knew that it: 1) motivated his employees, and 2) invited derision from the competition. Maybe that’s why in his “10 Rules for Successful Business” Walton wrote, “Think up your own stunt… it really fools competition. ‘Why should we take those cornballs at Wal-Mart seriously?’”. As above, precisely the images that contributed to competitors’ condescension of Walton contributed to his target group’s veneration of him. As other retailers discovered, belatedly, those “cornballs” at Walmart were as serious as a heart attack.

Ultimately, therefore, thinking about strategy must begin with thinking about your own culture and identity. Always bear in mind that they will shape your perception, your choice of approach, and how that strategy gets implemented. Their impact on the strategy making process is crucial, and it is important to recognize that this process is specific to each organization. In short, strategy is ultimately a reflection of an organization’s identity and culture, and these must be the point of departure when considering strategic issues.

So the next time a cave man, a new competitor or a disruption come along, before you start trying to understand them, try to understand yourself first.

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Really enjoyed reading this. It is so very true that our perceptions are incredibly guided by who we are and what we do. The real challenge is in coming up with patterns to change this. Do you have suggestions for ‘stepping out’ of our natural perspective?

What could Kodak have done to make things different? Could it just be that hindsight is 20/20? I’d be interested in your thoughts on that.

Hello Thanks for your comment. It’s really hard, no doubt. One of the things we advocate is diversity: we make a practical, not moral, case for diversity. Diversity of people, but also of organizational modes. One of the things Kodak could have done, for instance, is to start a new organization dedicated to pursuing the digital opportunity (this is what Nestlé did for Nespresso which also conflicted with its business model). It would have developed its own business model, with funding from Kodak, and possibly third party funding, which would not have been a problem to find for Kodak at the time. The work of Clayton Christensen offers interesting avenue for thinking about this issue. What do you think? Best

Established organizations struggle because of their bounded rationality to react to disruptions which include an element of ambiguity. It takes leadership to address the ambiguous elements and to paraphrase General Schwarzkopf, if it is a choice between having a leader with strategy or character, chose character. The idea of a separate organization to react to disruptive new situations is elegant and at least maximizes the chance of success

Thank you Siddharth Very true, the citation from General Schwarzkopf is great. But let’s not reduce the issue to that of individual leadership at the top. Our work on the CIA shows that it’s an issue of the collective body forming the organization. Leaders matter as far as they can influence this body and how it works.

I think we are on the same page here as my understanding is that the audience for General Schwartzkopf was middle ranking officers. Leaders who are closer to the field and making decisions, not just the ones at the top

Sure! Researcher Karl Weick uses the expression “Mindfulness” to describe the ability of some leaders to keep in touch with operations despite being high up there… We would argue that a deficit of mindfulness plus an excess of hubris explain a lot of the banking crisis…